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[SMM analysis] the start-up rate of scrap copper rods continued to decline in June compared with the previous month.
Jul 17,2019 11:43CST
translation
Source:SMM
In June, copper prices rebounded on optimistic expectations of the resumption of negotiations between China and the United States, and the gap between refined and scrap prices widened from about 700 yuan per ton at the beginning of the month to a maximum of 1300 yuan per ton. Compared with May, the output performance of scrap copper rod enterprises in June has stopped falling and stabilized. At present, the output of various enterprises has been maintained at a low level, and the space for further reduction is limited. However, due to the shutdown of some enterprises, the starting rate fell sharply in June compared with the previous month, and the copper scrap rod industry has not improved significantly.
The content below was translated by Tencent automatically for reference.

SMM7, 17th, news:

According to SMM survey data, the operating rate of scrap copper rod enterprises in June was 47.80%, a decrease of 6.64 percentage points from the previous month and 18.53 percentage points from the same period last year.

In June, copper prices rebounded on optimistic expectations of the resumption of negotiations between China and the United States, and the gap between refined and scrap prices widened from about 700 yuan per ton at the beginning of the month to a maximum of 1300 yuan per ton. Compared with May, the output performance of scrap copper rod enterprises in June has stopped falling and stabilized. At present, the output of various enterprises has been maintained at a low level, and the space for further reduction is limited. However, due to the shutdown of some enterprises, the starting rate fell sharply in June compared with the previous month, and the copper scrap rod industry has not improved significantly.

On the one hand, the price of scrap copper rose only about 500 yuan this month, the increase is not large, the previous price fell too much, the small rise in the price of scrap copper is not obvious to the market, scrap copper traders still show pity to sell. On the other hand, because of the concern about supply, the price of domestic scrap copper continues to perform strongly, the benefit of scrap copper used by waste enterprises is poor, and the enthusiasm of production is not high. At present, copper scrap rod enterprises still maintain a loss, only because the shutdown cost is higher, so most of them are still barely maintaining, and some enterprises began to stop production in June because of their poor efficiency, resulting in a further decline in the starting rate in June. It is understood that the shutdown in July has not yet seen a full resumption of production. Finally, from June to now, the consumption performance of the terminal power industry is relatively weak, resulting in a significant decline in the operating rate of the whole copper rod market, and orders for scrap copper rods are difficult to improve. Overall, scrap copper in June still does not have a consumer advantage, but in the overall weakness of copper consumption terminals, even if scrap copper sold to proficient in some markets, it is still difficult to change the weak demand for electrolytic copper.

According to the SMM survey, the operating rate of copper scrap rod enterprises is expected to be 48.14% in July, an increase of 0.34 percentage points from the previous month and 9.36 percentage points from the same period last year.

Copper prices still stabilized at a low level in July, and the center of gravity of copper prices has not yet broken through a high of 47000 yuan. Scrap copper rod enterprises market slightly improved, but the overall performance is still not ideal, stop production enterprises have not returned to normal production.

As for the import of scrap copper, according to SMM statistics, from January to May 2019, China imported a total of 580000 scrap copper metals, an increase of 12.94 percent over the same period last year, or about 67000 tons of metal. In April and May, due to the import effect, the import of scrap copper increased greatly, and it is expected that the amount of imported scrap copper can maintain a slight increase in the first half of the year before the implementation of the restrictive policy.

At the beginning of this month, the second batch of waste six types of approval documents were announced, with a total approval quantity of 124450 tons, involving Tianjin, Zhejiang, Anhui, Jiangxi and Guangdong, of which Guangdong accounted for 73.68 per cent. The total amount of metal approved in the first two batches in the third quarter was about 307000 tons, accounting for 83 per cent of the total imports in the same period last year. The market expects a third batch of approvals in the third quarter, so the reduction is not significant. At present, there is an increase of nearly 70,000 metal tons from January to May compared with the same period last year. If companies run out of approval quotas in the third quarter, imports of scrap copper can remain stable in the third quarter.

(SMM Wei Xue)

 

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